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Understanding LeaseCrunch Methodology and Approach to Present Value Calculations
General Approach
Theoretically, Present Value calculations are mathematically conducted by choosing a compounding period; year, month, day, etc. The accounting standards of ASC 842, IFRS 16, and GASB 87, 96 do not specify a required present value approach to compounding periods. LeaseCrunch Present Value methodology is based on the period of months. In practice, lease payment streams often include both monthly and yearly payments, thus the PV calculations are conducted consistently through the system based on the lowest common denominator: months.
Beginning of Month Payments
For Payments on the 1st -15th day of the month, LeaseCrunch uses a beginning of month convention, calculating the Present Value as if the Payment was on the 1st of the month.
End of Month Payments
For Payments on the 16th through the end of month, LeaseCrunch uses an end of month convention, calculating the Present Value as if the Payment was on the last day of the Month.
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